Monday, November 03, 2014

Nothing has changed my mind that it would be “unthinkable”
for the FCC to classify Internet service providers as common carriers under
Title II of the Communications Act, the part of the 1934 communications law
derived directly from the Interstate Commerce Act of 1887. The purpose of the
Interstate Commerce Act was to constrain what was then seen as the monopolistic
power of the railroads. The railroads were deregulated in the 1980s – long
before the emergence today’s broadband Internet providers.

In this third piece, I wish to focus further attention on
the real-world impact of Title II regulation (or even rigid, inflexible non-Title
II regulation) by taking the Title II advocates at their word regarding what
they demand. In doing so, I hope to encourage those inclined to align
themselves with the Title II advocates to understand the import of such
alignment. And I hope to get the general press to ask each FCC commissioner
whether he or she agrees with the Title II advocates that particular service offerings
that the Title II advocates say should be banned as discriminatory and inconsistent
an Open Internet should, in fact, be banned.

As the time for a potential FCC votes nears, it’s time to
talk about real cases with real consumer impacts, rather than simply regurgitating
open-ended mantras concerning preservation of an “Open Internet.”

In the cause of
furthering such consumer understanding, let’s begin by reviewing excerpts from
recent Wall Street Journal stories about new wireless pricing plans offered by
Sprint and T-Mobile.

·“For about $12, Sprint Corp. will soon
let subscribers buy a wireless plan that only connects to Facebook. For that
same price, they could choose instead to connect only with Twitter, Instagram
or Pinterest—or for $10 more, enjoy unlimited use of all four. Another $5 gets
them unlimited streaming of a music app of their choice.” “Sprint Tries a Facebook-Only Plan,” Wall Street Journal, July 30, 2014.

·“T-Mobile US Inc. will let customers
listen to several popular music services without counting it toward their data
use, giving up a potential revenue source to bolster its subscriber base. The
country's fourth-largest wireless carrier said it is going to waive data
charges when subscribers use services like Spotify, Pandora and Rhapsody.” “T-Mobile Will Waive Data Fees For Music
Services,”
Wall Street Journal, June 18, 2014.

Each of the plans
announced by Sprint and T-Mobile would appear to be attractive to consumers. In
one way or another, they all offer subscribers additional choices for accessing
services the subscribers wish to enjoy at a price lower than otherwise would be
available or, alternatively, without incurring data usage charges that
otherwise would be incurred. In the latter instance, such as the T-Mobile’s
“Music Freedom” plan, this feature has become known as “zero-rating” because
data usage charges do not apply when subscribers access sites covered by the
plans.

I do not know whether
these new wireless plans ultimately will prove successful in the marketplace,
which continues to evolve at a rapid pace. But I have not heard of any
meaningful consumer discontent with the plans. To the contrary, I surmise that
consumers welcome the additional options, especially low-income or
budget-conscious consumers who either are unable or unwilling to pay for
wireless plans that are not limited in some fashion.

Leading Title II advocates are opposed to these plans on the
basis that they discriminate by picking and choosing certain “edge providers”
to favor, say Facebook over the “next-Facebook,” or certain music sites over
others, or music sites over poetry sites.

In my “Net
Neutrality v. Consumers” essay, you can see for yourself the statements by
Free Press’s Matt Wood and Public Knowledge’s Michael Weinberg opposing these
T-Mobile and Sprint wireless plans as inconsistent with their understanding of an
Open Internet. And in the FCC’s Open Internet Roundtable (“Tailoring Policy to
Harms”) in which I participated, Julie Veach, FCC Common Carrier Bureau Chief, very
perceptively zeroed in on this issue right after the opening statements. You
can view my exchanges with Mr. Weinberg and also with Stanford law professor
Barbara van Schewick regarding the so-called “zero-rated” plans here
beginning at the 33 and 93 minute marks. You’ll see they object to the plans.

It is possible, of course, to imagine other “zero-rated” or
“sponsored data” plans, or other hypothetical offerings of a different variety,
that similarly would run up against the Title II advocates’ claim that they are
discriminatory and, therefore, should be banned. But we don’t need to imagine
other hypothetical examples because we have real-world offerings to which they
object.

To be clear, in my view, in light of the competitive
environment, spectrum constraints, and unique technical requirements, the
Commission should not extend any new net neutrality mandates to wireless
providers. The costs of doing so very likely will exceed the benefits to
consumers.

In thinking about imposing new net neutrality mandates, the
current Commission Democratic majority appears to have a pronounced proclivity
to elevate supposed potential harms to edge providers (especially non-existent
ones, such as the “next Google or next [fill in the blank”]) above real-world consumer
welfare benefits. So, Chairman Wheeler and each commissioner should consider
whether they too, like the stringent Title II advocates, think that plans like
those of T-Mobile and Sprint described above should be banned as discriminatory
– despite the fact that, as far as I can tell, they may be attractive to
consumers, especially low income consumers. (I am not suggesting that these
particular plans will ultimately succeed in the marketplace, only that
consumers will not be harmed by the providers’ seeking to meet perceived
consumer demands.)

If the three Democratic commissioners think such apparently consumer-friendly
plans should be banned, then perhaps, David Farragut-like, they should just proclaim,
“damn the torpedoes, full speed ahead.” But make no mistake: In actuality, they
will not be moving ahead, but retreating into last century’s world of legacy
regulation, confining Internet providers into the strictures of a common carrier
public utility-like regime.

If, on the other hand, the commissioners see the merit of allowing
Internet providers to experiment in the marketplace by making available
innovative, consumer-friendly service options such as the T-Mobile and Sprint
offerings discussed here, perhaps they will slow down and think twice about the
wrong direction the net neutrality proceeding seems to be headed.

PS – Oh yes, and perhaps some enterprising member of the
press will actually ask the commissioners whether they agree or disagree that
plans like T-Mobile’s and Sprint’s should be banned.